The budget from a startup owners point of view is very pro startups. Having freed startups from paying tax on their profits for three years out of the first five years of existence. Capital gains won’t have to be paid if the proceeds are invested in government-approved fund-of-funds or if an investor is a majority shareholder. This is bound to encourage angel investment and startup activity, thereby also creating more jobs.
A balanced budget with the right focus on rural and social sector. Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) has been allocated Rs 38,500 crore for 2016-17, 2015-16 along with Swacch Bharat Abhiyan and Fasal Bima Yojana–have been allocated Rs 9,000 crore and Rs 5,500 crore, respectively.
From a startups point of view, profit tax exemption for first three years is a good step, though most startups won’t make money in the first three years. Employment and employability are key areas for the government, where startups can pitch in with products and solutions.
It is good that the government decided to not increase the Service Tax or Income tax rate and also allowed for HRA concessions. This will help businesses and their employees.
Change in the definition of SME, focus on GST bill to be passes and added infrastructure spending are all boosters for the economic environment and startups stand to gain from them.
The fiscal deficit stands at 3.5 percent and the government is has made allocations of Rs 25,000 crore for recapitalisation to overcome the problems of non-performing assets. Public Sector NPA’s are a massive risk for the entire economy and should be a priority.
Budget 2016 has some interesting areas for of focus - especially in urban transport, profit tax, employment and employability. Focus on digital literacy, exemptions for poor women, enhanced agriculture focus are positive steps.
Overall, it seems like a mild budget with no major signs of reform or deviation. Steady and stable is the keyword, as India continues to grow faster than its peers and also meet some of its key taxation and revenue targets.
When Indian economy meets its targets, its startups and other stakeholders stand to gain from it.
Overall a diverse budget, touching many aspects of the economy – not hard hitting but gentle and stable.
Sairee Chahal is the founder and CEO of Sheroes. Sheroes is a career destination for women in India.
The views expressed are personal.